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Copyright 1993 The Times Mirror Company
Los Angeles Times
January 18, 1993
THE OIL FACTOR IN
SOMALIA
FOUR AMERICAN PETROLEUM GIANTS
HAD AGREEMENTS WITH THE AFRICAN NATION BEFORE ITS CIVIL WAR BEGAN.
THEY COULD REAP BIG REWARDS IF PEACE IS RESTORED
.By MARK FINEMAN
(Mark Fineman, died in Baghdad in September 2003 of a heart attack. He was 51 years old. He was also a great journalist, and a lot of fun to hang out with. He will be missed.)
DATELINE: MOGADISHU, Somalia
Far beneath the surface of the tragic drama of Somalia, four
major U.S. oil companies are quietly sitting on a prospective
fortune in exclusive concessions to explore and exploit tens
of millions of acres of the Somali countryside.
That land, in the opinion of geologists and industry sources,
could yield significant amounts of oil and natural gas if the
U.S.-led military mission can restore peace to the impoverished
East African nation.
According to documents obtained by The Times, nearly two-thirds
of Somalia was allocated to the American oil giants Conoco, Amoco,
Chevron and Phillips in the final years before Somalia's pro-U.S.
President Mohamed Siad Barre was overthrown and the nation plunged
into chaos in January, 1991. Industry sources said the companies
holding the rights to the most promising concessions are hoping
that the Bush Administration's decision to send U.S. troops to
safeguard aid shipments to Somalia will also help protect their
multimillion-dollar investments there.
Officially, the Administration and the State Department insist
that the U.S. military mission in Somalia is strictly humanitarian.
Oil industry spokesmen dismissed as "absurd" and "nonsense"
allegations by aid experts, veteran East Africa analysts and
several prominent Somalis that President Bush, a former Texas
oilman, was moved to act in Somalia, at least in part, by the
U.S. corporate oil stake.
But corporate and scientific documents disclosed that the
American companies are well positioned to pursue Somalia's most
promising potential oil reserves the moment the nation is pacified.
And the State Department and U.S. military officials acknowledge
that one of those oil companies has done more than simply sit
back and hope for pece.
Conoco Inc., the only major multinational corporation to mantain
a functioning office in Mogadishu throughout the past two years
of nationwide anarchy, has been directly involved in the U.S.
government's role in the U.N.-sponsored humanitarian military
effort.
Conoco, whose tireless exploration efforts in north-central
Somalia reportedly had yielded the most encouraging prospects
just before Siad Barre's fall, permitted its Mogadishu corporate
compound to be transformed into a de facto American embassy a
few days before the U.S. Marines landed in the capital, with
Bush's special envoy using it as his temporary headquarters.
In addition, the president of the company's subsidiary in Somalia
won high official praise for serving as the government's volunteer
"facilitator" during the months before and during the
U.S. intervention.
Describing the arrangement as "a business relationship,"
an official spokesman for the Houston-based parent corporation
of Conoco Somalia Ltd. said the U.S. government was paying rental
for its use of the compound, and he insisted that Conoco was
proud of resident general manager Raymond Marchand's contribution
to the U.S.-led humanitarian effort.
John Geybauer, spokesman for Conoco Oil in Houston, said the
company was acting as "a good corporate citizen and neighbor"
in granting the U.S. government's request to be allowed to rent
the compound. The U.S. Embassy and most other buildings and residential
compounds here in the capital were rendered unusable by vandalism
and fierce artillery duels during the clan wars that have consumed
Somalia and starved its people.
In its in-house magazine last month, Conoco reprinted excerpts
from a letter of commendation for Marchand written by U.S. Marine
Brig. Gen. Frank Libutti, who has been acting as military aide
to U.S. envoy Robert B. Oakley. In the letter, Libutti praised
the oil official for his role in the initial operation to land
Marines on Mogadishu's beaches in December, and the general concluded,
"Without Raymond's courageous contributions and selfless
service, the operation would have failed."
But the close relationship between Conoco and the U.S. intervention
force has left many Somalis and foreign development experts deeply
troubled by the blurry line between the U.S. government and the
large oil company, leading many to liken the Somalia operation
to a miniature version of Operation Desert Storm, the U.S.-led
military effort in January, 1991, to drive Iraq from Kuwait and,
more broadly, safeguard the world's largest oil reserves.
"They sent all the wrong signals when Oakley moved into
the Conoco compound," said one expert on Somalia who worked
with one of the four major companies as they intensified their
exploration efforts in the country in the late 1980s.
"It's left everyone thinking the big question here isn't
famine relief but oil -- whether the oil concessions granted
under Siad Barre will be transferred if and when peace is restored,"
the expert said. "It's potentially worth billions of dollars,
and believe me, that's what the whole game is starting to look
like."
Although most oil experts outside Somalia laugh at the suggestion
that the nation ever could rank among the world's major oil producers
-- and most maintain that the international aid mission is intended
simply to feed Somalia's starving masses -- no one doubts that
there is oil in Somalia. The only question: How much?
"It's there. There's no doubt there's oil there,"
said Thomas E. O'Connor, the principal petroleum engineer for
the World Bank, who headed an in-depth, three-year study of oil
prospects in the Gulf of Aden off Somalia's northern coast.
"You don't know until you study a lot further just how
much is there," O'Connor said. "But it has commercial
potential. It's got high potential . . . once the Somalis get
their act together."
O'Connor, a professional geologist, based his conclusion on
the findings of some of the world's top petroleum geologists.
In a 1991 World Bank-coordinated study, intended to encourage
private investment in the petroleum potential of eight African
nations, the geologists put Somalia and Sudan at the top of the
list of prospective commercial oil producers.
Presenting their results during a three-day conference in
London in September, 1991, two of those geologists, an American
and an Egyptian, reported that an analysis of nine exploratory
wells drilled in Somalia indicated that the region is "situated
within the oil window, and thus (is) highly prospective for gas
and oil." A report by a third geologist, Z. R. Beydoun,
said offshore sites possess "the geological parameters conducive
to the generation, expulsion and trapping of significant amounts
of oil and gas."
Beydoun, who now works for Marathon Oil in London, cautioned
in a recent interview that on the basis of his findings alone,
"you cannot say there definitely is oil," but he added:
"The different ingredients for generation of oil are there.
The question is whether the oil generated there has been trapped
or whether it dispersed or evaporated."
Beginni 1986, Conoco, along with Amoco, Chevron, Phillips
and, briefly, Shell all sought and obtained exploration licenses
for northern Somalia from Siad Barre's government. Somalia was
soon carved up into concessional blocs, with Conoco, Amoco and
Chevron winning the right to explore and exploit the most promising
ones.
The companies' interest in Somalia clearly predated the World
Bank study. It was grounded in the findings of another, highly
successful exploration effort by the Texas-based Hunt Oil Corp.
across the Gulf of Aden in the Arabian Peninsula nation of Yemen,
where geologists disclosed in the mid-1980s that the estimated
1 billion barrels of Yemeni oil reserves were part of a great
underground rift, or valley, that arced into and across northern
Somalia.
Hunt's Yemeni operation, which is now yielding nearly 200,000
barrels of oil a day, and its implications for the entire region
were not lost on then-Vice President George Bush.
In fact, Bush witnessed it firsthand in April, 1986, when
he officially dedicated Hunt's new $18-million refinery near
the ancient Yemeni town of Marib. In remarks during the event,
Bush emphasized the critical value of supporting U.S. corporate
efforts to develop and safeguard potential oil reserves in the
region.
In his speech, Bush stressed "the growing strategic importance
to the West of developing crude oil sources in the region away
from the Strait of Hormuz," according to a report three
weeks later in the authoritative Middle East Economic Survey.
Bush's reference was to the geographical choke point that
controls access to the Persian Gulf and its vast oil reserves.
It came at the end of a 10-day Middle East tour in which the
vice president drew fire for appearing to advocate higher oil
and gasoline prices.
"Throughout the course of his 17,000-mile trip, Bush
suggested continued low (oil) prices would jeopardize a domestic
oil industry 'vital to the national security interests of the
United States,' which was interpreted at home and abroad as a
sign the onetime oil driller from Texas was coming to the aid
of his former associates," United Press International reported
from Washington the day after Bush dedicated Hunt's Yemen refinery.
No such criticism accompanied Bush's decision late last year
to send more than 20,000 U.S. troops to Somalia, widely applauded
as a bold and costly step to save an estimated 2 million Somalis
from starvation by opening up relief supply lines and pacifying
the famine-struck nation.
But since the U.S. intervention began, neither the Bush Administration
nor any of the oil companies that had been active in Somalia
up until the civil war broke out in early 1991 have commented
publicly on Somalia's potential for oil and natural gas production.
Even in private, veteran oil company exploration experts played
down any possible connection between the Administration's move
into Somalia and the corporate concessions at stake.
"In the oil world, Somalia is a fringe exploration area,"
said one Conoco executive who asked not to be named. "They've
overexaggerated it," he said of the geologists' optimism
about the prospective oil reserves there. And as for Washington's
motives in Somalia, he brushed aside criticisms that have been
voiced quietly in Mogadishu, saying, "With America, there
is a genuine humanitarian streak in us . . . that many other
countries and cultures cannot understand."
But the same source added that Conoco's decision to maintain
its headquarters in the Somali capital even after it pulled out
the last of its major equipment in the spring of 1992 was certainly
not a humanitarian one. And he confirmed that the company, which
has explored Somalia in three major phases beginning in 1952,
had achieved "very good oil shows" -- industry terminology
for an exploration phase that often precedes a major discovery
-- just before the war broke out.
"We had these very good shows," he said. "We
were pleased. That's why Conoco stayed on. . . . The people in
Houston are convinced there's oil there."
Indeed, the same Conoco World article that praised Conoco's
general manager in Somalia for his role in the humanitarian effort
quoted Marchand as saying, "We stayed because of Somalia's
potential for the company and to protect our assets."
Marchand, a French citizen who came to Somalia from Chad after
a civil war forced Conoco to suspend operations there, explained
the role played by his firm in helping set up the U.S.-led pacification
mission in Mogadishu.
"When the State Department asked Conoco management for
assistance, I was glad to use the company's influence in Somalia
for the success of this mission," he said in the magazine
article. "I just treated it like a company operation --
like moving a rig. I did it for this operation because the (U.S.)
officials weren't familiar with the environment."
Marchand and his company were clearly familiar with the anarchy
into which Somalia has descended over the past two years -- a
nation with no functioning government, no utilities and few roads,
a place ruled loosely by regional warlords.
Of the four U.S. companies holding the Siad Barre-era oil
concessions, Conoco is believed to be the only one that negotiated
what spokesman Geybauer called "a standstill agreement"
with an interim government set up by one of Mogadishu's two principal
warlords, Ali Mahdi Mohamed. Industry sources said the other
U.S. companies with contracts in Somalia cited "force majeure"
(superior power), a legal term asserting that they were forced
by the war to abandon their exploration efforts and would return
as soon as peace is restored.
"It's going to be very interesting to see whether these
agreements are still good," said Mohamed Jirdeh, a prominent
Somali businessman in Mogadishu who is familiar with the oil-concession
agreements. "Whatever Siad did, all those records and contracts,
all disappeared after he fled. . . . And this period has brought
with it a deep change of our society.
"Our country is now very weak, and, of course, the American
oil companies are very strong. This has to be handled very diplomatically,
and I think the American government must move out of the oil
business, or at least make clear that there is a definite line
separating the two, if they want to maintain a long-term relationship
here."
Fineman, Times bureau chief in Nicosia, Cyprus, was recently
in Somalia.
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